Correlation Between Marriot Vacations and IA Financial

Can any of the company-specific risk be diversified away by investing in both Marriot Vacations and IA Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Marriot Vacations and IA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marriot Vacations Worldwide and iA Financial, you can compare the effects of market volatilities on Marriot Vacations and IA Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Marriot Vacations with a short position of IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marriot Vacations and IA Financial.

Diversification Opportunities for Marriot Vacations and IA Financial

0.92

Correlation Coefficient

Marriot Vacations  IA Financial

Almost no diversification

The 3 months correlation between Marriot and IAFNF is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Marriot Vacations Worldwide and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Marriot Vacations is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Marriot Vacations Worldwide are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Marriot Vacations i.e., Marriot Vacations and IA Financial go up and down completely randomly.

Pair Corralation between Marriot Vacations and IA Financial

Considering the 90-day investment horizon Marriot Vacations Worldwide is expected to generate 1.6 times more return on investment than IA Financial. However, Marriot Vacations is 1.6 times more volatile than iA Financial. It trades about 0.19 of its potential returns per unit of risk. iA Financial is currently generating about 0.2 per unit of risk. If you would invest  7,247  in Marriot Vacations Worldwide on September 2, 2024 and sell it today you would earn a total of  2,678  from holding Marriot Vacations Worldwide or generate 36.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Marriot Vacations Worldwide  vs.  iA Financial

Marriot Vacations

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marriot Vacations Worldwide are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marriot Vacations exhibited solid returns over the last few months and may actually be approaching a breakup point.

iA Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, IA Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marriot Vacations and IA Financial

The main advantage of trading using opposite Marriot Vacations and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marriot Vacations position performs unexpectedly, IA Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IA Financial will offset losses from the drop in IA Financial's long position.

The idea behind Marriot Vacations Worldwide and iA Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.